What is the two-pot retirement system? Who is it for?

Two-pot retirement system

What is the two-pot retirement system? Who is it for?

The two-pot retirement system is a reform that will allow retirement fund members to make partial and managed withdrawals from their retirement fund before retirement, while preserving the greater portion that can only be accessed at retirement.

How it works.

From 1 September 2024, retirement contributions will split into a savings component and a retirement component. On-third of total contributions will go into the savings component, while two-thirds will be paid to the retirement component.

The third element is called the vested component which will house all benefits accumulated by the member up to the implementation of the two-pot retirement system.

Preservation with flexibility.

Used prudently, the two-pot retirement system can help to improve members’ chances of achieving a liveable or successful retirement. For example, when resigning or being retrenched, many members currently access their accumulated retirement fund benefits simply to survive. In some cases, people will resign to access their retirement savings to service debt or meet other needs which may include short-lived leisure purposes. This leaves a marked gap in their retirement savings, whereas the two-pot system allows members to access their savings component and leave the retirement portion untouched and growing.

Funds drawn from the retirement savings, will be taxed.

Who is the two-pot retirement system meant for?

The new system is set for September 2024 and will apply to all retirement funds, stretching across both public and private sector funds.

Exclusions are old generation or legacy retirement annuity policies such as funds in liquidation, beneficiary funds, closed funds, or dormant funds.

Pensioners and members of provident funds who were 55 years or older on 1 March 2021 who do not opt to partake in the two-pot retirement system will also be excluded.

Over the next months, retirement fund management companies will be communicating with their members to smoothen the transition to the two-pot retirement system.


Bianca S Moyo
Communication Senior Manager
Salt Employee Benefits